The UK’s sluggish economy is likely to dampen any recovery in the housing market for months to come, two separate surveys have found.

According to the Royal Institute of Chartered Surveyors (RICS), there will be no “sustained” increase in house prices until more mortgages are made available to consumers.

Meanwhile PricewaterhouseCoopers has predicted further price falls in 2009 and 2010. This warning comes in spite of recent price rises in some parts of the property market.

Recent housing surveys have suggested that the housing market is stabilising, with the Nationwide building society reporting a steady 6% rise in UK house prices since February.

However, economists at PwC said that in the current climate, with lenders offering fewer mortgages and UK unemployment looking likely to increase for some time, average house prices were likely to fall further in 2009 and 2010.

“Despite some recent reports of rises, we are not out of the woods yet and buyers should take a long-term rather than a short-term view,” the firm said in its report.

It also warned that by 2020 house prices could be lower in real terms than 2008 levels, even if this were preceded by five years of strong growth.

The RICS said that short term price rises were likely. Its survey found that more surveyors expected property prices to rise than fall for the first time since May 2007. Around 6% more surveyors expected price rises in the coming months than a fall in house prices, compared with 11% more expecting falls during May’s survey. This new burst of optimism was due in part to the limited availability of housing and increased interest from potential buyers, the RICS said.

However, it added that signs of improvement were likely to be short lived, and that a “sustained upturn” in the housing market was “unlikely while mortgage lenders remain risk adverse”.

“A lack of stock on the market is providing a platform for modest price increases,” said RICS spokesman Jeremy Leaf.

“While supply remains tight, the market may continue to show tentative signs of firming but instructions are starting to increase in some regions and this could dampen any meaningful recovery as long as economic conditions remain quite so uncertain.”

This entry was posted on Tuesday, July 14th, 2009 at 8:56 am and is filed under Housing Market, Mortgages. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.